The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Empire State Realty Trust Inc (NYSE:ESRT).
Empire State Realty Trust Inc (NYSE:ESRT) was in 16 hedge funds' portfolios at the end of the first quarter of 2020. ESRT investors should pay attention to a decrease in hedge fund interest in recent months. There were 18 hedge funds in our database with ESRT positions at the end of the previous quarter. Our calculations also showed that ESRT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_340075" align="aligncenter" width="400"] Mason Hawkins of Southeastern Asset Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to review the fresh hedge fund action regarding Empire State Realty Trust Inc (NYSE:ESRT).
How have hedgies been trading Empire State Realty Trust Inc (NYSE:ESRT)?
Heading into the second quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the fourth quarter of 2019. By comparison, 14 hedge funds held shares or bullish call options in ESRT a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Mason Hawkins's Southeastern Asset Management has the largest position in Empire State Realty Trust Inc (NYSE:ESRT), worth close to $62.1 million, corresponding to 1.5% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, with a $41.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that hold long positions encompass Charles Fitzgerald's V3 Capital, John Overdeck and David Siegel's Two Sigma Advisors and Noam Gottesman's GLG Partners. In terms of the portfolio weights assigned to each position V3 Capital allocated the biggest weight to Empire State Realty Trust Inc (NYSE:ESRT), around 5.8% of its 13F portfolio. Southeastern Asset Management is also relatively very bullish on the stock, dishing out 1.48 percent of its 13F equity portfolio to ESRT.
Seeing as Empire State Realty Trust Inc (NYSE:ESRT) has faced falling interest from the smart money, we can see that there exists a select few hedgies that decided to sell off their entire stakes last quarter. At the top of the heap, Paul Marshall and Ian Wace's Marshall Wace LLP cut the largest position of the "upper crust" of funds monitored by Insider Monkey, valued at about $4.5 million in stock, and Donald Sussman's Paloma Partners was right behind this move, as the fund sold off about $1.2 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 2 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Empire State Realty Trust Inc (NYSE:ESRT) but similarly valued. These stocks are Seaboard Corporation (NYSE:SEB), Littelfuse, Inc. (NASDAQ:LFUS), Globant SA (NYSE:GLOB), and Axis Capital Holdings Limited (NYSE:AXS). All of these stocks' market caps resemble ESRT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SEB,15,108625,-3 LFUS,22,218011,1 GLOB,17,81232,-1 AXS,32,593560,-2 Average,21.5,250357,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $250 million. That figure was $152 million in ESRT's case. Axis Capital Holdings Limited (NYSE:AXS) is the most popular stock in this table. On the other hand Seaboard Corporation (NYSE:SEB) is the least popular one with only 15 bullish hedge fund positions. Empire State Realty Trust Inc (NYSE:ESRT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th and surpassed the market by 16.8 percentage points. Unfortunately ESRT wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); ESRT investors were disappointed as the stock returned -24.2% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.